Producthero Labelizer Strategy: forcing Google and Performance Max to be more efficient

Producthero’s Labelizer Strategy offers merchants a solution to the problem of losing control when using Performance Max campaigns in Google Ads. This solution forces Google’s Performance Max algorithm to make more efficient choices.

Advertisers already using the solution are seeing improvements of up to 30% and more. Advertisers such as Rituals and G-Star RAW, among others, took part in the test process. The advertising costs are distributed more efficiently among the products. This is because sharper choices are made in the products that are put in Google’s shopping window.

FIND OUT HOW IT WORKS IN LESS THAN 2 MINUTES

WHY THIS SOLUTION?

More than half of the advertising webshops in Google use Performance Max campaigns. By using this campaign type, the advertiser leaves the optimization to Google and the advertiser has very little control and insights.

In Performance Max, Google has developed a powerful algorithm that takes over the optimization completely from the advertiser and expands the reach to YouTube, Gmail and the Google Display Network. Recent research conducted by Producthero among its advertisers shows that these campaigns give better results for most online stores than regular shopping campaigns. Nevertheless, a number of interesting insights emerged that apply to almost all advertisers:

• 50% of the costs go to products that are underperforming: they cost the advertiser money
• 80% of sales come from less than 10% of products
• More than 60% of the products are ‘sleeping’: they hardly get any impressions and clicks

HOW DOES THE SOLUTION WORK?

By using Producthero’s Labelizer Strategy, the advertiser achieves more revenue at the same cost. This solution analyzes the behaviour of the products on a daily basis. It then ensures that advertising costs are reduced on products that are underperforming. Sleeping products are activated and the best-performing products are given more space to be displayed.

Producthero’s Segmentation tool analyzes the behaviour of the products on a daily basis and categorizes them into 4 personas:

The product personas explained:

HERO – Less than 10% of products generate more than 80% of sales. With the right treatment, these products become ‘superheroes’ and generate even more sales.

VILLAIN – Around 50% of advertising costs go to products that don’t perform well. The advertiser literally loses money here and can save by giving them less budget.

SIDEKICK – Some products do quite well, but at low volume. With the right treatment, they will generate more sales.

ZOMBIE – More than 60% of the products are ‘sleeping’: they get almost no impressions and clicks. By activating them, they can generate revenue.

THE EFFECT OF USING THE LABELIZER STRATEGY

By using Producthero’s Labelizer Strategy, the advertiser achieves more conversion value at the same or a better cost ratio:

• More revenue is generated by better bringing out Heroes and Sidekicks and activating Zombies.
• Costs are saved by reducing ad spending on Villains.

CLIENT CASES

Several clients are already seeing performance increases of up to 30% and more. 

Take for example this client, who split tested using PMax campaigns against using PMAx + the Producthero’s Labelizer Strategy:

Because the inefficient cost of villains is strongly reduced, the total cost of this advertiser goes down. On the other hand, by treating Heroes and Sidekicks the right way and activating Zombies the overall revenue goes up. It ended up with a revenue increase of 44,4% while ROAS increased by 15,3%.

One can see the shift by analyzing the spending behaviour of the different product personas when Producthero’s Labelizer strategy is activated. This is what it looks like: 

HOW CAN I START?

You can apply Producthero’s Labelizer strategy using Producthero’s Shopping Ad Platform PRO, and see these insights when you advertise on Producthero CSS. Check out Producthero’s Labelizer Strategy for more information.